4. Backlog shrunk dramatically (50%) yoy to 22% of target volume or 240 of 1050 home target for 2007. Historically backlogs have been 30-40% of the next years revenue (trailing 5 years).

Negatives for short:

1. Brookfield homes is an affiliate of Brookfield Asset Management and Brookfield properties. B.A.M. owns 53% of BHS. Brookfield's revolving credit facility comes from Brookfield Asset Management and thereforethey have a VERY friendly lender... this is perhaps the most problematic part of developing a short thesis for these guys. Three of BHS directors serve as executive officers and/or directors of Brookfield's affiliates (BAM, B-Properties).

THIS SUPPORTIVE GROUP OF AFFILIATES AND FINANCIERS IS PROBLEMATIC TO ASHORT THESIS. - but the rest of the story could support significantly lower prices over the near term.

===================Profile / Markets===================62% of BHS sales are booked in the State of California with about 38%split between Washington DC (32%) or for Other / corporate property(6%).. The company has 59 spec homes built and manages 33 communtiies.This is down from 153 spec homes in 2006 and at their target.

2.) Average Selling Price for a BHS home was $655,000 in Q2 2007.This is a 11% decrease from the $739,000 average selling price in Q2 2006.

3.) Volume fell 25% from 1582 closed homes in 2006 to 1159 in 2007

4.) Cancellations: were at 22% in Q2 - consistent with Q1 2007... I'dexpect this number to spike again in Q3.

==========================Gross Profit Margins:==========================H1 2007 Gross Margins fell to 18% down from 30% in 2006. Given that theaverage selling price was $655k I presume the average gross profitmargin per home is $117k.

Further price declines and cancellations will destroy 2007 for BHS... no premium is deserved here. [more]